Historically, business interruption claims have arisen after natural disasters damage commercial property. But coverage may be available based on specialized policies or endorsements already written into existing insurance policies.
An insurance endorsement (also known as a “rider”) is an amendment or addition to an existing insurance policy that changes the terms or scope of the original policy. Riders are legally binding amendments to the existing insurance contract. In response to prior infectious disease outbreaks like SARS, the insurance industry has developed certain endorsements that specifically provide coverage for business interruption due to such diseases even without direct physical damage to the insured’s property.
These are not common forms, and the odds are, if you have them in your policy, then you or your broker specifically requested it
What to look for:
- Leader Property and/or Attraction Property Endorsements
- Pandemic, Virus, and Communicable Disease Coverage
- Pandemic Event Cancellation Coverage
- Communicable Disease Coverage
- Limited Fungi, Bacteria, and Virus Endorsement
At Raizner Law, we have a reputation for securing successful results for insurance coverage clients throughout Texas and across the country. Our experienced lawyers have successfully resolved large, complex insurance disputes against nearly every major insurance company.
“Pandemic Events” Coverage
(Lloyd’s at London, using PLIS “Trade Name Restoration” policy)
- Found in some Lloyd’s of London policies, this is coverage that specifically contemplates business losses during a pandemic.
- Coverage triggered when an infected person has visited a covered location or when the business has been shut down by a “Public Health Authority”.
- Covered damages include business income (loss of revenues) and extra expense.
- Extraordinarily broad list of what “Covered Diseases” trigger coverage, including “SARS-associated Coronavirus disease” and any “mutations or variations”.
- Not necessary to show direct physical damage to the covered property, which is necessary for most other business interruption policies.
Communicable Disease Endorsement
- Coverage for “direct physical loss or damage” to covered property caused by, or resulting from, a “communicable disease”.
- Some policies require that the premises be “evacuated, decontaminated, or disinfected” due to an outbreak at the premises.
- Some cover business income and extra expense, as well as costs to clean up the premises and public relations firms to manage the reputation of the business.
- The disease must be present at the covered location itself, and must result in “direct physical loss or damage;” generalized presence of the virus not enough.
Limited Virus Coverage
(Hartford Business Flex policy)
- Typical endorsement covers “fungus, wet rot, dry rot, bacteria, and virus”.
- Requires direct physical loss or damage.
- Often capped at $50,000, this is not a standard coverage form but must be purchased separately.
- This may or may not coverage business interruption losses, and may simply cover costs to tear out and replace affected buildings.
Event Cancellation Coverage
- Typical purchaser will be tradeshows, conferences, expos, consumer shows, annual meetings, conventions, sporting events, concerts, award ceremonies, fairs, festivals, and more.
- Protects loss of gate receipts, expenses, transportation, and other incidental damages due to the cancellation of a large event.
- The list of significant sporting, concert, and convention events cancelled by Covid-19 is very long, but it is unclear how many event hosts secured this coverage to protect them from it.
- This is not travel insurance to protect an event attendee, but protection for the host of the event.
Leader or Attraction Property Coverage
- This endorsement that provides coverage to the insured for direct physical loss, damage, or destruction of the type insured by the insured’s property policy to property not owned or operated by the insured, located within the stated distance to insured’s property or business, and which attracts business to the insured.
- Examples would include a nearby amusement park, casino, mall, or destination retail store.
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